## Facts

- D.E.F. Investments (doing business as Renter’s Choice Home Furnishings) operated rent-to-own stores in Minnesota offering consumer goods (e.g., furniture, televisions, appliances) under standard form agreements.
- Customers rented items for weekly or monthly terms, paying each term’s rental amount in advance.
- At the end of each term, customers had a unilateral option to renew for another term.
- If customers renewed for a specified number of terms, title to the goods transferred to the customer without additional consideration.
- The total payments required to obtain ownership commonly exceeded the goods’ fair market value.
- Delilah Miller and Craig Stenzel entered multiple rent-to-own transactions; some resulted in ownership and others did not.
- Miller and Stenzel, on behalf of a class, alleged the agreements were effectively credit sales with unlawful finance charges exceeding Minnesota’s general usury limit (Minn. Stat. § 334.01) and violating the Consumer Credit Sales Act (CCSA) (Minn. Stat. §§ 325G.15–.16).
- The district court granted summary judgment for plaintiffs on usury, treating the agreements as “consumer credit sales” under the CCSA.
- The court of appeals reversed, concluding the agreements were not consumer credit sales for purposes of the claimed usury violation and were not usurious.

## Issues

1. Whether the rent-to-own (rental-purchase) agreements were “consumer credit sales” under Minn. Stat. §§ 325G.15–.16.
2. If they were consumer credit sales, whether they were subject to Minnesota’s general usury statute, Minn. Stat. § 334.01.

## Decision

- The Minnesota Supreme Court reversed the court of appeals and remanded.
- The court held the rent-to-own agreements were “consumer credit sales” within the CCSA.
- The court held these consumer credit sales were subject to the interest-rate limitations of the general usury statute.

## Legal Principles

- A transaction labeled as a rental may be treated as a credit sale when its economic substance is a financed acquisition of consumer goods through periodic payments leading to title transfer after specified renewals.
- When a rent-to-own agreement makes ownership the expected result upon completing a set number of renewals, the arrangement can satisfy the “sale on credit” component of a consumer credit sale.
- Inflated total payments relative to fair market value may reflect a finance charge for the extension of credit.
- Once an agreement is classified as a consumer credit sale under the CCSA, Minnesota’s general usury limits may apply to the effective finance charge unless a specific statutory authorization provides otherwise.
- Remedial consumer-protection statutes are construed to prevent circumvention of interest limits through contract form.

## Conclusion

The Minnesota Supreme Court treated rent-to-own agreements as consumer credit sales based on their functional operation as financed purchases and held that, as credit transactions, they are subject to Minnesota’s general usury limitations, requiring further proceedings to determine appropriate remedies.


Miller v. Colortyme, Inc., 518 N.W.2d 544 (Minn. 1994)